ACCA: ACOs demand culture change

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While there are more questions than answers surrounding Accountable Care Organizations (ACOs), these models will make facilities more accountable for delivering valued care to the patient, said Phillip L. Ronning, president of Ronning Healthcare Solutions in Newberg, Ore., during a presentation last week at the annual leadership conference of the American College of Cardiovascular Administrators (ACCA).

A paradigm shift, “appeared to be called accountable care,” is gearing up within the healthcare system and the mantra is “bend the cost curve,” Ronning said.

While the meaning of an ACO remains undefined, a workable organizational culture will ultimately produce the needed results. Ronning offered that ACOs will become a matter of culture, not organizational structure and the “true challenge will become becoming accountable for improving quality and reducing costs.” But he questioned healthcare's ability to change.

Ronning said that the previous model of managed care was killed by skyrocketing costs, and claimed costs and quality are inversely related.

While ACOs are at the forefront of the paradigm shift within healthcare, Ronning said, accountability simply means “someone to blame.” He noted that the inverse of accountability is responsibility, “so accountable care should really be called responsible care.”

With the healthcare industry set to change, part of the change will be responding resourcefully to the challenge. A major part of this will be re-assessing the current system by cutting waste, focusing on peer review and increasing collaboration.

And while the U.S. may be a frontrunner in terms of opportunity—technology, resources, among others—we sit on the backburner in terms of waste.

“Our results compared to the rest of the world are miserable,” said Ronning, who noted that the U.S. currently ranked last in terms of healthcare expenditures compared with the rest of the world. However, higher healthcare spending does not result in higher quality.

“What is causing this waste?” asked Ronning. He claimed that a major share of waste can be attributed to hospital readmissions, 30 percent of which he said are unnecessary and avoidable.

The current fee-for-service model is based off the mantra of “do more, make more; do less, make less," and Ronning said that this model has caused overuse, avoidable readmissions, fragmented coordination and inappropriate care.

The following problems exist within today's healthcare system:

  • Healthcare costs cannot increase;
  • Patients don’t get what they pay for;
  • There are too few PCPs; and
  • There are too many specialists.

And while ACOs have yet to prove that they will patch the aforementioned problems, possible solutions with ACOs include:

  • Aligning incentives between pay-for-performance and savings models;
  • Pushing for integration;
  • Initiating population-based payments;
  • Enhancing the role of the PCP and decreasing the number of specialists (because specialists increase costs); and
  • Initiating population-based payments.

Ronning offered that ACOs should be based on quality rather than volume, promote primary care and replace fragmentation with collaboration. Additionally, there should be more of a focus on value-based care and quality outcomes reporting.

“The ACO structure is designed to replace the financial temptation to misuse or overuse services with an organizational concept that encourages accountability,” Ronning concluded.

However, the costs to start an ACO may offset savings. Ronning reported a pilot of a physician group practice model which showed that the cost per Medicare beneficiary was reduced by $120 (1.2 percent). Meanwhile costs to participate in one of these physician group practice models outshined savings, with the average participant spending $489,354 to initiate the project and $1,265,897 to operate it during project year one.

While benefits of the ACO may include innovation, enhanced payor relations and organizational development, Ronning stated that risks could be linked to costs, legalities and uncertainties surrounding the still unidentified implementation approach.